The two most universally accepted forms of franchising are:
Business format franchising
This is defined as a distribution network operating under a
shared trademark or trade name, with franchisees paying the
franchisor for the right to do business under that name for a
specified period of time. In exchange, the franchisee is able to
use the franchisor’s entire business system or format, including
the name, goodwill, product and services, operating manuals
and standards, marketing procedures, systems and support
facilities. The franchisor, in turn, is obliged to give initial and
ongoing services and support.
Product and trade name franchising
Characterised as a sales relationship between a supplier and
a dealer, product and trade name franchises can be found
most commonly in car dealerships, petrol service stations
and cooldrink bottlers. The dealer is granted the right to sell
its products in exchange for fees and royalties and has an
obligation to sell only the franchisor’s products.
Source: FASA
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